There’s a saying: If all economists were laid end to end, they would not reach a conclusion.
Yesterday, I blogged about how one economist thinks we will see inflation this year. Today, I read The 2010 Housing Outlook where Mark Zandi the chief economist of Moody’s Economy.com has sobering predictions for sellers: Home prices are going to fall by -4.56% in Boston between now and this time next year. Then they might start turning around. (Emphasis on “might”)
The following are excerpts from The 2010 Housing Outlook:
…At the top of Zandi’s list of worries are foreclosures-especially, the million of loans that are in foreclosure or headed there that can’t or won’t be modified. According to RealtyTrac, nearly 2 million housing units in the U.S. are in foreclosure or bank owned, and millions more are likely to join them. Zandi estimates that 2.4 million homes will find their way into foreclosure next year. He expects banks to start putting those properties on the market more aggressively during the first half of the year, resulting in a flood of cut-rate inventory that will drag prices down.
…Zandi’s second concern: sky-high unemployment … A soft job market, especially one this soft, means potential buyers don’t have money to pour into a new homes or the confidence that they’ll be able to hold on to their jobs and pay the mortgage on their existing home.
Another concern: Policymakers will pull their support from the market prematurely (first-time homebuyer tax credit and the Fed’s purchase of mortgage-backed securities), which could bump mortgage rates up as much as a full point.